Topic: Mining hash rate distribution - page 2. (Read 611 times)

Bullshit, the part what you write as "plus 51% hash power". It's certainly some time ago when I read the Whitepaper last, but I can't remember something in it to support your claim.

You do realize that Bitcoin evolves, don't you? The "longest chain" has changed to the "chain with most accumulated work" wins, for obvious reasons. There's no point in clinging to the wording of the whitepaper. It's not the Bible or the Ten Commandments.



I disagree and I seriously can't follow you how you come to this conclusion. While it is somewhat problematic that certain mining pools aggregate quite some percentage of hashrate, I still don't see what kind of an issue it is as long as their percentage doesn't approach substantially more than 35-45%. We had in former times a pool that got to about or slightly over 50% and concerns and "shitstorm" were loud. To my knowledge that didn't happen again.

Where's the problem? Pinpoint it, please! What benefit should a party have which made enormous investments required to approach 50% of the global hashrate. Do funky stuff then and send Bitcoin into unseen turmoil? That would be economic suicide, very certain! I'd say, no government would dare to burn an investment like this to the ground, even if they hate Bitcoin. It wouldn't make any sense, economically.



Still can't follow you, but if you want to believe this, well, you do yours. Maybe I'm just too tired now or you've already made up your mind and cling to it.

Fundamentally, Bitcoin is built on the principle of transparency, at least to the extent where feasible. It would be incorrect to say that the principles that Bitcoin was built on is compromised solely because there are limitations to what we can do as far as decentralization, transparency, etc can go. Make no mistake, there are no perfect systems in the world and compromises has to be made in every of them.

For example, if you want something to be completely decentralized, then you would have to do it at the expense of something else, which can be transparency or any other property that Bitcoin has. The assertion that Bitcoin is compromised just because of what is postulated in this thread would be wrong. There are limitations to what an adversary can do with a good proportion of the hashrate, and as mentioned, it wouldn't make sense for adversaries to do so.

PoW works like this. The rule of the longest chain plus 51% hash power is written in the whitepaper.


The reality is that one has to trust the various actors, without being able to verify their actions. This invalidates one of the basic principles of blockchain.

So we have to trust, Bitcoin could be controlled by the government or finance. A tool that was born to fight the banks has become part of them. So sad https://imgur.com/a/PreVIYz

I basically agree, unfortunately one has to trust without being able to verify.

Yeah, handily, you mean tossing around words and realizing what I've said with two hours of pondering even after someone pointing it out
just...
You might not believe it but it really made me thinking a lot, would you have a case against such a miner in court if you sustain financial loss? It might sound like  solid case but I wonder if they could go clean with just negligence blaming on not receiving and sending the blocks via a faulty node configuration.
3-4 blocks might not be much but 6-12 hours will wreak havoc on chain for a good while.
But on the other hand, all transactions are visible in the chain and any such thing would require first a settlement between the two parties in the transactions before the miners, weird one.

Oh, and something to add about the distribution and identifying hashrate location, we had a 4% drop mainly because of Texas shutting down, (officiality acknowledge by large farms), all those farms are making the bulk of Foundry, yet Foundry didn't lose significant market share, nor it is gaining right now with hashrate up 6%, so applying tinfoil hat (quadruple layers) on as I said in mining speculation, they might have well over the 30% just mining over other pools undercover!

He will control the ordering of the transactions. And sure, if he controls it ad infinitum, then he can choose to never mine any transaction.

You can verify the source code, the signatures of the transactions, the Proof-of-Work, the amount of chain work that is accurately estimated to have happened. But no; you cannot be certain about the distribution of the hash rate. You can only rely on statistics.

I like how handily you insert that "just". 

NO! Again this is not about control!
The longer chain will take over ONLY if it follows the rules, that's it!
Imagine if that wouldn't have been the case, it would mean every miner with 1TH/s could create his own blockchain, how would that work if you would have to follow whatever chain there is?
The 51% attacker doesn't change the rules, he just present a chain with VALID transactions, VALID blocks that follows the rules but it has more work behind it!


Then I think we should introduce mandatory KYC data in the blockchain since right now:
- you trust mining nodes by verifying the blocks just as you verify a transactions coming from someone
- your NEEDS demand that you know the identity of the miner creating a valid block, then obviously you need the IDENTITY of a guy sending you coins, right?  


What part of permissionless did you skip?  

That's a valid point but there is no provable ways to accurately tell where the hashrates are, what the hashrate is or the distribution of it. Bitcoin is designed to be transparent, but unfortunately the pseudonymous nature also means that it is difficult to ascertain certain things beyond a reasonable degree. I don't think it is easy to do so, or if you have a feasible idea to do it, then we can hear from you as well. If not, then I believe that should be the end of that discussion.

POW or basically any mechanism favours those with the most resources, because it functions by game theory and the assumption that you stand to lose the most if you are dishonest. I have no doubt that financial institutions or governments have a hand in mining. But, what can they do? Attack the chain? That would probably achieve nothing, beyond a minor inconvenience while costing them tens of millions of dollars, and even more in terms of opportunity cost. I don't foresee any governments being willing to attack Bitcoin for practically no benefits.

I am not at all interested in investments. I am here for the technology.


According to the whitepaper https://bitcoin.org/bitcoin.pdf:
The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains. To modify a past block, an attacker would have to redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the work of the honest nodes.

So whoever controls most of the hash power controls the PoW consensus. According to the two searches in my first post, 50-60 miners control it.


From my point of view, this is a serious lack. Knowledge of the distribution of the hash rate is crucial. This invalidates one of the principles of blockchain: don't trust, verify. How is it possible to know whether mining is controlled by finance or government?

Go to every single company listed onto the stock exchange and you're going to see the shareholders and you get pretty much 30% of the hashrate!
Btw, if you think they are some illuminati that can control everything and down in money , why don't you buy shares in them too?



Stop with the POW consensus!!!!
Miners that mine 70% receive 70% of the reward, they can't change the "consensus" , they can fork the chain and keep mining there  by their rules but that can be done even by a guy with 5%, see BCH and BSV! If a 51% attacker would try to mine blocks that don't follow the rules they will be rejected by nodes, this is not a democracy where the guys having 51% of the vote can pass every single rule and the rest are forced to obey them!


There is none and there will never be!
As long as a company mines in two countries and points the hashrate at a private pool you have zero chances of knowing how much is there owned by who and where it resides, and this is just a simple example!
I mined over various pools, sent my money to both cold wallets and different exchanges, so there is no way one could allocate my hashrate (of course minuscule in the great scheme) to any location with precision, that unless they have access to all the logs of all mining pools in this world!

I have read all your links without finding answers to my questions.


These two articles are interesting, but show nothing new.
Beware attacking the network for malicious purposes is one thing, controlling the production of a blockchain for one's own favourable interests another.
Relying only on the past to predict the future is misleading, see the inductivist turkey example https://en.wikipedia.org/wiki/Turkey_illusion

I shared but you did not read.

There are some researches and reports that show in the past, there are some dominating mining pools, which can have combined hash rate big enough to attack Bitcoin network. Unfortunately, they did not do that and I believe they see no good benefit by attacking the network.

Visual Analytics of Bitcoin Mining Pool Evolution: On the Road Toward Stability?


The evolution of mining pools and miners’ behaviors inthe Bitcoin blockchain

My first paper in my first post confirms the results:
A Deep Dive into Bitcoin Mining Pools https://github.com/MatteoRomiti/Deep_Dive_BTC_Mining_Pools
we conduct the first in-depth analysis of mining reward distribution within three of the four largest Bitcoin mining pools and examine their cross-pool economic relationships. Our results suggest that individual miners are simultaneously operating across all three pools and that in each analyzed pool a small number of actors (≤ 20) receives over 50% of all BTC payouts.
However, if you have a more updated and better version, I will read it.


According to both articles, some miners, about 50-60 or <=20 per pool, control more than 50% of the network hashing power, thus controlling the PoW consensus. Who do you think own these miners? They need hundreds of millions of dollars of investment.


Thanks for the explanation. As you pointed out, mining is a random process and the probability of being the first to mine a block is proportional to the hash power, i.e. if you have x% of the total hash power, in the long run you will mine x% of the blocks on average. Thus, miners who have at least 51% of the hash power on average control the PoW consensus and are rewarded by the network. Again, in theory everyone can participate, but in practice the chances of influencing the 51% decision and being rewarded are only statistically significant for those with a high hash rate and an investment of hundreds of millions of dollars.


If you have better sources I will gladly read them. They may be out of date, however the data collected shows the history of bitcoin mining has been.

Hihi, yeah but also
Investors != Miners. hmmm but also != Poll owners != Investors in a mining company !=  CEOs out of touch with reality !=  Drunk technician coming high at work!


The only way a 51% would unfold right now  (not counting area 52 having a replica of Omnius in the basement) would be a wave of bankruptcies due to losing profits and someone being able to take over those mining farms at a fraction of the costs or even for free and with deep enough pockets and grudge to actually mount such a thing, but by the time this happen we would already be in a lot of deep *** since it would come with a ridiculous drop in price.

So basically nobody is going to kill the golden goose, but someone might want to throw a few rocks at it when you leave it out of the yard unguarded!


It's outdated since it doesn't have Foundry and it's before the great migration, the second the payment tracing is a bit ridiculous, how do you deal with guys that have mining farms in 3 countries and how do you deal with the ones that don't sell their coins! If riot or core decides to make a purchase in BTC from Bitmain and send 1000 BTC to Okex you suddenly move 30 Exahash from the US back to China!  Genuinely curious how would separate with this method Canada and the United States!

I've glimpsed over your cited paper and their methodology to try to identify individual miners who point their hashpower to pools looks quite legit (to me). It's not fool-proof but to my understanding they tried to apply reasonable efford to make a good miner attribution (in the sense to identify pool payout to individual miners and thus those miner's hashpower contribution).

It's not too surprising that in Bitcoin mining bigger is better as you gain advantage with size because certain cost factors don't scale linearly with size. A very simple example is an individual miner with 10 ASICs. This individual could likely handle also 20 ASICSs alone, so no additional expenses for labour. Maybe this miner also has the space for the additional 10 ASICs, so almost no additional cost for storage of his mining rig. On the other hand he has doubled costs for energy and likely cooling. I'm very much simplifying here…



How do you come to that conclusion regarding your institutional investors?

Hashpower concentrates into pools. According to your cited paper there are not many miners with a great percentage of hashpower that point their hashpower to large mining pools. Agreed on that and this development isn't actually too surprising and I personally don't see much of an issue here. It's economy in a very competetive playground.


This is nonsense or paints an oversimplified picture. In practice anybody can join a mining pool and point his hashpower to it. You're probably excluded from certain larger pools that have a lower limit of required minimum hashpower, but that doesn't prevent you from finding some other pool that will accept your hashpower.

If there're 50-60 miners who provide a majority of hashpower to pools, then those big miners gain most of the coin rewards from pool payouts. That doesn't mean that all other participating miners don't get anything, see below for explanation.

Are you sure, you understand PoW mining? There's no such thing as PoW consensus (51%). Bitcoin mining PoW forces you do execute hashwork to find a blockheader hash that satisfies the required mining difficulty (your to be found blockheader hash needs to be lower than a certain hash value dictated by current difficulty). Finding such a blockheader hash is due to the used hash algorithm a completely random process. You can hit a valid blockheader hash within a few thousands or millions hashes (statistically very … very unlikely) or you need a ridiculously high number of hashes to hit it for which you need longer than some other miner who was luckier than you.
Again: it's a random process and with higher hashpower you gain statistical advantage.

Mining pools mitigate the risk of solo-mining. With "fair" pools you're paid statistically according to your provided hashpower compared to global hashpower within the granularity of the pool's payout scheme. Choose your mining pool wisely! I didn't want to go into pool payout schemes as it's probably not relevant to go into such details here and now.

According to the research reported in my first post:

Blockchain Analysis of the Bitcoin Market https://mitsloan.mit.edu/sites/default/files/2022-06/Bitcoin-blockchain%20-%20AER.pdf
We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity. Furthermore, this concentration of mining capacity is counter cyclical and varies with the Bitcoin price. It decreases following sharp increases in the Bitcoin price and increases in periods when the price drops or when there are halving events. Thus, the risk of a 51% attack increases in these times as well.

Also, according to this research from August 2022 page 13 when the hash rate was about 207.2 EH/s https://kraken.docsend.com/view/2gwc64da9h5ccmhm, to get 51% hash rate were necessary 2.16 M S19 antminers, $8.6 B hardware cost and $19.8 M electricity cost/day.

So, in theory, everyone can participate, but in practice to be in the 51% hash rate, i.e. 0.1% of the miners, about 50, several hundred million dollars are needed. These are the reasons for the questions in my first post.

Investors != Miners. If they are investors, they may not necessary be the ones mining at the pool either. The thing about these pools is that they are NOT exclusively tailored for a small number of miners, but they are tailored to accommodate for a large number of miners with their own farms. That alone should tell you how decentralized Bitcoin mining is.

The FUD that is put forth in this thread is largely unwarranted. The key factor that you're ignoring is with the game theory that the miners are involved in when they invest their resources into mining. The key question would lie with whether they gain more when they act maliciously, or honestly. It would be obvious that the answer is to be honest. Selfish mining is largely only a concern among pools, because they are able to gain an unfair advantage than the rest of the pools. It poses much less of a security threat than you think.

foundry has a 20ph minimum level.

that is 150 s19xp's burning 500kwatts an hour.


so you need 3000 x 150 =                     $450,000 in miners
a mining box maybe                                75,000
a transformer that can go to 600kwatts = $25,000

hard pressed to be ready for under 575K usd.

and power cost per month need to be under 6 cents. which is 262,800 for power.

add in labor.

I put it at 1 million dollars to be able to mine with foundry

Not at all. Learn how mining and pools work. Just the people on this board who mine are more then the "0.1%" that you claim.
Anyone can point their miners at Ant or F2 or Via or Kano or another pool.

Just because you don't have a bunch of S19 sitting in your garage does not mean that other people don't.

https://explorer.btc.com/btc/insights-pools

-Dave

I repeat myself: